Fact Sheet on the Payment of Salary

Equal Rights Publication ERD-13109-P

Note:
The links (bookmarks) in the Table of Contents take you to that section in this Publication.
The links in the Text take you to either a page in our website, a section in the Wisconsin Statutes or a section in
the Wisconsin Administrative Code.

"Salary" is a regularly paid amount of money, constituting all or part of an employee's wages, paid on a weekly or less frequent basis,
that is not subject to reduction due to the quality or quantity of work performed. This is the general definition in federal law (29 CFR
541.118). Since Wisconsin�s overtime law does not define "salary," and since
Wisconsin’s overtime exemptions are interpreted in a manner
consistent with federal interpretation, this is the applicable definition.

Any employee can be paid on any basis - salary, hourly, commission, piece-rate, flat rate as long as they receive minimum wage for all
hours worked in the pay period, and as long as overtime is paid when required . Overtime is usually required at time and one-half the regular rate of pay for hours worked in excess of
40 in a week. There is a provision in the overtime regulations (Chapter DWD 274, Wisconsin
Administrative Code) that "exempts" employees whose primary duty is administrative, executive, or professional work from overtime
requirements. One of the requirements for each of these types of work to meet the exemption is that they are paid on a salary basis.

Not all salaried employees are "exempt." Employees must meet the definitions in the law in order to
be classified as exempt. For more information on these definitions see "Wisconsin Hours of Work and Overtime Law".

No. Employers have the right to schedule employees as they feel is necessary. If the employee is not exempt, overtime must be paid for hours worked in excess of 40 in a week. In factories and mercantile establishments employees must have at least 24 consecutive hours of rest in each calendar week, under
�103.85, Wisconsin Statutes. The employer can require that employees work extra hours if they are necessary.

This depends upon the wage agreement between the employer and the employee. If the employee is exempt (as an executive, administrative employee, or professional), generally no additional pay would be owed unless there is some agreement for additional pay. For non-exempt salaried employees, the employer must pay overtime if the employee works more than 40 hours. They may have to pay additional amounts if it is specified in the agreement that the salary is meant to be compensation for up to 45 hours. Contact the Equal Rights Division for additional information regarding this type of situation.

Overtime must be paid at time and one-half the regular rate of pay. The "regular rate" is an hourly rate that will change for a salaried employee based upon the number of hours worked in a week. Since salary constitutes wages at straight time for all hours worked, the employer owes an additional half-time for the hours in excess of 40 in a week. An example follows:

Example: A non-exempt employee is paid a salary of $500 per week, and works 50 hours in a given week. Since the agreement is just that
the employee will be paid a $500 salary, that sum would cover any number of hours worked. The regular rate for this week is the salary
($500) divided by the 50 hours worked, or $10.00. To pay overtime, the employer would divide the regular rate in half ($10.00 divided by
2, or $5.00), and then multiply that result by the 10 overtime hours. The overtime due for this week would be $50. The employee's gross
wages for the week, including overtime, would be $550 (the $500 salary plus $50 in overtime pay).

Wisconsin law allows this method of overtime compensation for salaried, non-exempt employees, but federal law may not. Contact the
federal Wage and Hour Division ((608) 441-5221) for further information.

Yes, but only if the deduction is made in conjunction with a bona fide sick pay policy that provides payment for absences that occur because of illness or accident. If the employer has a sick pay policy, but the employee is not eligible for benefits under the policy for the first 90 days of employment, the employer may deduct for full days of absence due to illness during that first 90-day period. If the policy offers five sick days per year and the employee has used those days, deductions may be made for full days of absence due to illness after the sick pay has been used.

If work is not made available to employees paid on a salary basis for part of a
workweek, the employer may not reduce the week's salary.
If work is not made available for an entire workweek, however, no salary needs to be paid.

An employer may not deduct from salary for absences that take place because of jury duty, attendance as a witness, or temporary military leave. The employer may, however, offset the salary by amounts received by the employee as jury or witness fees, or as military pay. It is important to note that the employer does not have to pay any salary if the employee does not work at all in a workweek for any of these reasons.

Yes. An employer can require that employees use leave time to make up missed days, as long as the leave time is sufficient to replace what would otherwise be lost salary. This does not constitute a deduction of the salary for the week if the amount paid is the same.

The answer is yes, but "prorate" is not the best way to refer to this change. An employer may change the salary of an employee in a situation like this. Caution is advised, because changing the salary each week might be seen as payment of hourly wages rather than meeting the definition of salary basis.

Yes. The employer may change the method of payment when it wishes, as long as the employer informs the employee prior to the performance of the work. If the employee is non-exempt, and the employer always pays overtime, this causes no particular problem. For exempt employees, there may be a problem, however. Repeated changes made simply to reduce overall wages and to avoid the payment of overtime may be viewed as not in keeping with
"salary basis," and the exemption may be lost. Be careful about making frequent changes.

Employers in the State of Wisconsin must keep time and payroll records for most
employees. The required records must include the time in and the time out on a
daily basis, the total number of hours worked per day and per week, and the time
in and out for meal periods if that time is deducted from hours worked. Meal
periods may be deducted from hours worked if they are at least 30 consecutive
minutes in duration, and if the employee is relieved of duty and free to leave
the premises during the break. Note: Wisconsin law does not require meal periods
or rest periods for adult employees. Minors may not work more than 6 consecutive
hours without receiving a meal period of 30 consecutive minutes.

Employers are not required to keep time/payroll records for
employees who are exempt from overtime requirements and paid on other than an
hourly basis. Salaried employees may beexempt if
they meet the salary basis test and a duties test for exempt administrative,
executive, and/or professional employees.